Market Segmentation and Mapping

Not everyone is your customer

A business that tries to sell to *everyone* usually appeals to *no one*. Smart businesses split a market into segments - groups of customers with something in common - and target the ones they serve best. They also draw a market map to see where rivals sit and where the gaps are. This module covers both: how to segment a market, and how to map it.

Segmentation words

Four terms run through the whole topic.

Match each way of segmenting to an example

What is segmentation?

What does market segmentation mean?

• Dividing a market into groups of customers with similar characteristics
• Selling the same product to absolutely everyone in the same way
• Lowering the price until every competitor leaves
• Copying exactly what the biggest competitor does

Why bother segmenting?

Segmenting a market lets a business focus. Instead of a vague message aimed at everybody, it can: - Target its marketing at the customers most likely to buy\n- Meet needs better by tailoring the product, price and message to a segment\n- Spot gaps - segments that rivals are ignoring\n\nThe result is less wasted effort and a clearer offer.

Real benefits of segmenting

Select the TWO genuine benefits of segmenting a market.

• The business can target its marketing at the right customers
• The business can spot gaps and unmet customer needs
• It guarantees the business will make a profit
• It removes all competition from the market

Crowded spot or open gap?

A market map plots brands on two features (say price and quality). Where they cluster is crowded; where they do not is a gap.

Match each map term to its meaning

What does a market map show?

A market map, also called a positioning map, shows what?

• How competitors are positioned on two features, revealing gaps
• The exact profit every competitor makes each year
• A full list of every customer's name and address
• The order in which businesses were founded

Plot the premium brand

This market map plots price (across) against quality (up). Three budget brands are already shown, low on both. Plot where a new PREMIUM brand - high price and high quality - would sit.

Build and use a market map

Put the steps of creating and using a market map into a sensible order.

• Choose two features that matter to customers, such as price and quality
• Draw the two axes, one for each feature
• Plot each competitor in its position on the map
• Look for a gap where few or no competitors sit
• Check whether there is real demand before filling the gap

Make the business call

Three positioning decisions, each with invented options. Pick the strongest one.

• Your market map shows a gap at "high quality, low price". The team is excited. What should they check first?
• You sell sports drinks and want to group customers by how much they exercise. Which type of segmentation is that?
• Two rivals sit very close together on your market map. What does that suggest?

Your turn: position the business

A new independent coffee shop is deciding how to position itself. Explain how market segmentation and a market map could help it find a profitable position, and why a gap in the market is not always a good opportunity.

• Explain what segmentation is and give one way to segment coffee customers
• Explain what a market map shows (two features and competitor positions)
• Explain how the map helps spot a gap in the market
• Explain why a gap is only worth filling if there is enough demand

Segment, then map

Segmentation and mapping work together: segment to decide *which customers* to serve, then map the market to decide *how to position* against rivals. The mark-winning judgement is this: a gap is not automatically an opportunity. An empty spot on the map is only worth filling if there is real demand for it and the business can serve it profitably. Always weigh the gap against the demand.